Live in Pennsylvania, work in DE but not permitted to go to DE office....tax refund?

[cwb124]

Hello,

I am an IT worker who lives in Pennsylvania but my office of record is Delaware and I have DE states taxes (roughly 6%) taken out of my check.  PA state taxes are only 3%.  My question is, I was barred from entering my DE office starting around March 19 of 2020 due to the pandemic and I haven't been there since as it remains closed to me.  How can I use turbotax to file my taxes using an apportionment to get the DE state tax back that I shouldn't owe because I wasn't allowed to go to work there.  Thank you!

[ErnieS0]

You will not be able to apportion income between Pennsylvania and Delaware if you commuted to Delaware prior to the pandemic but are now working from home.

Governor Tom Wolf issued a Proclamation of Disaster Emergency on March 6, 2020, for the COVID-19 pandemic which keeps your status unchanged.

Compensation for Pennsylvania residents who were working in Delaware before the pandemic remains sourced to Delaware under the proclamation.

You will still be able to claim a resident credit for tax paid to Delaware.

Refer to Employees in Telework During the COVID-19 Pandemic by the Pennsylvania Department of Revenue.

[cwb124]

I appreciate the reply.  Is there anywhere to see the actual legal/tax syntax regarding this?  I guess I'm confused because I didn't think the PA Gov had anything to do with this.  I know I will still get credit to PA for taxes paid to DE, but I am unclear how Gov Wolf's disaster proclamation has anything to do with me still paying DE state taxes despite not being allowed into the state for a certain period of 2020, and not being permitted by my employer to enter my office between March 19 an Dec 31, 2020.

[ErnieS0]

This is how the Pennsylvania Department of Revenue is treating telework for income tax purposes. The link Telework During the COVID-19 Pandemic are the instructions from the Department's website.

Representatives of the Department personally explained this procedure during their Annual Fall Tax Seminars to accountants.

You can contact the Department of Revenue at 717-787-8201, schedule a call or submit a question.

[cwb124]

Not sure my question is clear. I have no questions about the taxes I owe Pennsylvania. Since I live here I owe them tax no matter what.  And that is a flat rate if 3%.

The question is the 6% of state tax that DE is taking out of my check despite me not being permitted to work in the state for most of last year.  I don't believe I should owe that 6% to DE from March 19 to dec 31 because either the state line was technically closed and/or my work office was not open.  This has nothing to do with PA. This has to do with DE being entitled to my tax money or not.

[DaveF1006]

It depends. I am not sure if there are COVID contingencies or not regarding the closure of state lines.  What you can do however is file state returns in both states. First file in the State of Delaware as a non-resident and Pa as a resident. One of two things will happen.

1. You will receive a refund in the State of Delaware for all taxes withheld and Pa will tax your income earned while working for a Delaware employer or:
2. Pay taxes in Delaware and Pa will give you a credit for income taxes paid in another state. 

[cwb124]

Thanks for the reply!  I have to file returns in both states anyway since DE takes state taxes out of each check and I have to file with DE and then also with PA to get the credit.  It's that 3% difference in taxes that I need to figure out how to get back.  I doubt DE will just refund me those taxes without some type of special form or something filling, that's what I'm trying to figure out.

[JotikaT2 · Accepted solution]

I would agree with you as it is unlikely Delaware will just refund the taxes. 

The state of Delaware only mentions on their site that you need to report your wages on a non-resident state income tax return and then claim a credit on your resident tax return as was mentioned above.

Delaware frequently asked questions page

The only other way to try to have your return re-evaluated is to potentially file a tax appeal.  This is typically done if you receive a proposed assessment from the state of Delaware.  But as these times have been different with Covid restrictions, you could evaluate if that would be a route you would like to try.  I have attached a link below for the process.

Delaware tax appeal process

[TomD8 · Accepted solution]

The taxability of your income by the State of Delaware is determined by the laws of Delaware, not the laws of Pennsylvania.

Delaware taxes non-residents only on Delaware-source income.

Title 30, Section 1124 of Delaware Tax Code defines Delaware-source compensation as follows:

1) Compensation, other than pensions, as an employee in the conduct of the business of an employer, for personal services:

a. Rendered in this State, or

b. Attributable to employment in this State and not required to be performed elsewhere.

https://delcode.delaware.gov/title30/c011/sc03/index.shtml

Thus, if you were required to work outside Delaware, the income from that work would not be Delaware-source income, and therefore would not be taxable by Delaware.

[bruehens]

The Delaware Div of Revenue states that Schedule W should be used for the Covid closure to work in the state of DE and work from PA.   So far, the TurboTax help has been unable to show how to access the Schedule W to accomplish the proper apportionment of the fraction of DE actual work days and tax refund for days not allowed in DE to work.    Still hoping for a last minute help here before going 100% paper on DE.

[TomD8]

@bruehens --  According to this recent thread, Delaware Schedule W is not included in the TurboTax program:

Where is Delaware Schedule W? I did not work in th... (intuit.com)

Here's a link to the print version:

Schedule W (delaware.gov)